CCI To Pause Enquiry Until SEBI Concludes Investigation, Bombay High Court Says In Trustees Case

The Bombay High Court on Monday asked the securities regulator to complete its enquiry and form a prima facie opinion by June 30 against the Trustee Association of India as well as IDBI Bank, Axis Bank and SBICap trustees.

The court passed the direction after the petitioners informed that all documents sought by SEBI will be furnished by April 30.

The matter reached the bench of Justice GS Patel and Justice Madhav Jamdar of the high court after the association and the three debenture trustee firms challenged an order by the Competition Commission of India.

In December last year, the CCI had directed its investigation arm to examine allegations of cartelisation against these entities. The firms have challenged the CCI's jurisdiction saying any investigation against them can only be carried out by the sectoral regulator, that is the Securities and Exchange Board of India.

In the earlier hearing, the high court had expressed concerns around the possibility of conflicting orders, if parallel proceedings are carried out by the CCI and SEBI.

To avoid this outcome, today, the high court directed the CCI and the regulator's investigation arm to not adjudicate until SEBI concludes its inquiry.

As the hearing moved to a close, the bench asked the CCI to eventually examine the implications of cartelization under the Competition Act, 2002. "If few entities decide to form a group and fix the price (of a product/service) ... but this does not drive out another competitor from the market, does it amount to cartelisation? We need a more nuanced definition for the term."

Both the regulators are investigating the debenture trustees and their association's conduct, basis a complain by Muthoot Finance Ltd. The NBFC has alleged that these debenture trustee firms have raised their fees without giving issuers any specific reasoning.

The matter will be next heard on July 1.